Thursday, July 16, 1998 Last modified at 12:58 a.m. on Thursday, July 16, 1998

Counties in line to net tobacco funds

Tentative deal in state lawsuit calls for $2 billion payment

By MARY ALICE ROBBINS

Morris News Service

AUSTIN ? A tentative agreement reached in the state's lawsuit against the tobacco industry would provide about $2 billion to Texas counties and hospital districts as repayment for treating indigents with smoking-related ailments.

Ward Tisdale, a spokesman for state Attorney General Dan Morales, confirmed that an ''agreement in principle'' has been worked out but declined to discuss any specifics. ''The judge has said not to talk about the particulars, and we're going to abide by that.''

The agreement was reached Tuesday after negotiators met privately for two days in Texarkana. U.S. District Judge David Folsom, who presides over the tobacco suit, had summoned the parties.

Seven counties and hospital districts sued to intervene in the state's suit after the deal was reached in January. They want to recover their uncompensated costs for treating poor patients for tobacco-related illnesses.

Fleming said the tentative agreement still must be approved by the commissioners courts and governing boards representing the counties and hospital districts that sued.

If the agreement is finalized, the reimbursement for the health costs will be in addition to the $15.3 billion the tobacco in-dustry had agreed to pay the state, he said.

The original settlement the state had with the industry includes a ''favored nation'' clause. That means the payments to Texas must match the settlement reached with any other state.

Because Minnesota got a better deal in its settlement, Texas will collect more money. Allison said the amount to be paid to the counties and hospital districts depends on the final settlement figure.

Morales was in New York on Wednesday to work out details of the additional settlement.

The issue raised by the counties and hospital districts is one of several that have stalled a final judgment in the case.

Another major dispute is over the fees for the private lawyers who represented the state in the suit. Gov. George W. Bush and seven legislators have sought to block the lawyers from collecting $2.3 billion in contingency fees they would get under an agreement signed by Morales.

Morales filed a motion asking that Folsom assess $25 million in sanctions against Bush and the seven legislators.

Senate Finance Committee Chairman Bill Ratliff, R-Mount Pleasant, said Morales must drop the sanctions motion before the agreement with the counties and hospital districts can be finalized.